MacLeod v Mears Ltd [2014] EWHC 2191 (QB)

Case No HQ13X03240[2014] EWHC 2191 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 08/07/2014
Before
MR JUSTICE HAMBLEN
Between
Duncan MacleodClaimantMears LtdDefendant
Patrick Hennessey (instructed by Payne Hicks Beach) for ClaimantRichard Leiper (instructed by Eversheds LLP) for DefendantHearing Hearing dates: 24, 25 and 26 June 2014
Judgment

Introduction

[1]The Claimant (“Mr Macleod”) claims over £2 million against his former employer, the Defendant (“Mears”), which he contends is due to him under a profit sharing bonus agreement.[2]This is the trial of liability. The principal liability issues which arise are(1) whether an agreement was made;(2) the terms of any such agreement, and(3) whether it was varied or superseded.

Factual background

[3]Mears is engaged in the business of providing repair and upgrade services for residential properties.[4]In September 2007 Mears acquired the social housing division of Makers UK Ltd (“Makers”) from its parent, Keller Group plc. It was a distress purchase.[5]Mr Macleod was a senior contracts manager with Makers in which role he tendered and managed building refurbishment contracts for social housing developments.[6]About 100 Makers employees transferred to Mears. These included Mr Macleod and a colleague, Mr Webb. It was proposed that Mr Macleod and Mr Webb should become Partnering Managers in a newly created sub-division of Mears called Mears Projects which would incorporate the existing social housing contracts which Mears had acquired from Makers.[7]At Makers Mr Macleod’s basic annual salary was £56,000. His contract entitled him to “consideration for bonus payments at the discretion of the Directors”. His employment on those terms transferred to the Defendant automatically under the Transfer of Employment (Protection of Undertakings) Regulations 2006 (TUPE).[8]During October and November 2007 there were various meetings held between Mr Macleod, Mr Webb and Mr Hodgson, an external consultant engaged by Mears to assist in the acquisition of Makers, at which the nature and terms of their employment at Mears were discussed.[9]The issue of remuneration was dealt with at meetings with Mr Miles, then Managing Director of Mears and subsequently (and now) its CEO. There was a meeting with him on 9 October 2007. At that meeting Mr Miles explained how Mears operated a grading system for their employees with differing remuneration packages. He also explained that Mears had a bonus scheme under which 50p in the pound of any profit achieved in excess of approved budget was put into a pot for distribution within the business. He told them that Mears was typically separated into business units according to geographical regions but that for Mears Projects it was intended that it would be split into four teams and that two of the teams would be managed by them. He asked them to prepare, in advance of their next meeting, a budget for their respective projects up to the end of 31 December 2008, which was the end of Mears’s financial year. There was a detailed discussion about the basis upon which the budget should be prepared.[10]On 2 November 2007 Mr Webb sent Mr Miles an email with attachments which reflected these discussions.[11]The attachments were set out in a single spreadsheet with various tabbed documents. These included a document headed “Notes” which provided as follows: “NOTES[1]Overhead charge from Group 2% to include IT (hardware, software and support), BDM, Marketing, H & S, Customer Care services, training, QA costs, PCG’s and any audit/finance etc charges.[2]Profit charge from Group to be 3% on turnover up to 31st March 2008 and 5% thereafter.[3]£240k loss against South Essex included elsewhere. Turnover to be excluded from net profit calculations.[4]Adjustments to be made for management time allocated in completing old and excluded projects for Keller UK Ltd.[5]Incentive payments based on 50p in the pound on Net Profit and 75p in the pound on Keller Liability projects (after allowance for accounted losses deducted). Incentives to be identified separately per team.[6]Retention recovery and associated subbie payments on previous completed projects – terms TBA.[7]Contract insurance charge from Group is 0.85%.[8]No allowance for non-contract staff from Mears has been allowed.[9]Interest won’t be charged on working capital.”[12]The attachments also included budgeted “work forecasts” for November 2007 to March 2008 and for April to December 2008. Separate forecasts were made for the projects to be managed by Mr Webb (colour coded blue) and those to be managed by Mr Macleod (colour coded red). There was a heading “Team” under which there were Mr Webb’s initials (colour coded blue) and Mr Macleod’s initials (colour coded red) in relation to their respective projects. The forecasts included the group overhead (2%) and profit charges (3%) set out in the Notes. They set out a projected net profit figure for each month.[13]They also included a list of proposed contract staff and of proposed salary rates. The proposed salary for the Partnering Managers was £70,000 plus a car allowance of £10,500.[14]On 5 November 2007 Mr Hodgson sent out a global email which set out the proposed staff structure for each of the four teams to be headed by the selected Partnering Managers. Mr Webb was to be the Manager of “Team 1” and Mr Macleod the Manager of “Team 2” (the other Managers were Mr Cannon and Mr Fitzmaurice).[15]On 6 November 2007 Mr Webb sent Mr Miles a revised spreadsheet stating that he “attached revised proposals adjusted to suit the proposed team structures”.[16]The main differences from the attachments to his earlier email were that there was now an Agenda document, which included at point 3:
“Terms of Agreement”, and the Notes document was now headed “Terms of Agreement”
. It was in the same terms as the earlier document, save that the following paragraphs had been added:
“10. Profitability from April 2008, the first £100k profit will be retained by management team, thereafter 50/50 split Mears/management. 11. Effective from 1st November 2007.”
[17]The other difference was that the list of proposed contract staff had now been split into proposed “Team 1” (colour coded blue) and “Team 2” (colour coded red).[18]On 7 November 2007 Mr Webb and Mr Macleod met Mr Miles to discuss these proposals.[19]At the meeting they worked through the agenda. It was agreed that Mr Webb and Mr Macleod would be Grade 8 employees on a salary of £70,000. The proposed budgets were agreed. Mr Miles explained that 50p in the pound of any operating profit would be put in a bonus pot for each team at the end of each financial year, with the finance director having the ultimate say on the calculation of the pot. There would then be a discretionary distribution of the pot within the teams. It was also agreed that 75p in the pound would be payable on the taken over Makers projects (“the Keller Liability projects”). The duration of that agreement is disputed and shall be addressed below.[20]Following the meeting, on 14 November 2007, Mr Webb sent Mr Miles an email with spreadsheet attachments with “revised projections and agreements as discussed”. It further stated that “we look forward to receiving your formal approval”.[21]The attached documents included a revised Terms of Agreement (“the T/A”). This was in the same terms as before save that there was a replacement paragraph 6 and a new paragraph 12. The document now stated as follows: “Terms of Agreement[1]Overhead charge from Group 2% to include IT (hardware, software and support), BDM, Marketing, H & S, Customer Care services, training, QA costs, PCG’s and any audit/finance etc charges.[2]Profit charge from Group to be 3% on turnover up to 31st March 2008 and 5% thereafter.[3]£240k loss against South Essex included elsewhere. Turnover to be excluded from net profit calculations.[4]Adjustments to be made for management time allocated in completing old and excluded projects for Keller UK Ltd.[5]Incentive payments based on 50p in the pound on Net Profit and 75p in the pound on Keller Liability projects (after allowance for accounted losses deducted). Incentives to be identified separately per team.[6]Operational overheads for Mears Projects will be charged at 1%.[7]Contract insurance charge from Group is 0.85%.[8]No allowance for non-contract staff from Mears has been allowed.[9]Interest won’t be charged on working capital.[10]Profitability from April 2008, the first £100k profit will be retained by management team, thereafter 50/50 split Mears/management.[11]Effective from 1st November 2007.[12]Justin Webb & Duncan Macleod to be Grade 8 as the Mears Group Benefits sheet, to include company car or car allowance, title to be as Grade 6 until changed after consultation period.”[22]On 16 November 2007 Mr Miles replied stating that “I can confirm the attached meets with my full approval and will commence this month”. It was Mr Macleod’s case that a contractual agreement as set out in the T/A was thereby made.[23]In around March 2008 Mr Hodgson formally became an employee of Mears. He was made Managing Director of Mears Projects and Mr Macleod’s line manager. He undertook a review of the business with a view to implementing certain changes.[24]Mr Macleod, Mr Webb and Mr Hodgson met in March 2008 and discussed among other things remuneration and bonus arrangements. There is a dispute as to what, if anything, was agreed during those discussions.[25]In May 2008 Mr Macleod was paid a bonus of £25,000.[26]Mears maintained that the bonus was accepted on a basis which involved a variation of the T/A. Mr Macleod maintained that the payment was accepted as an interim payment. I find that there is no clear evidence of the basis upon which this, and later bonus payments, were made and accepted and that there is insufficient evidence to find that a contractual agreement was made thereby, whether by variation or otherwise.[27]On 23 June 2008 Mr Hodgson circulated a basic spreadsheet which was to form the basis of a new business plan. On 25 July 2008 he invited comments and input on a draft ‘Business Plan 2008 to 2011’.[28]On 18 August 2008 Mr Macleod circulated his initial responses stating among other things that the proposal was not aligned to the agreement reached between Mr Macleod, Mr Webb and Mr Miles.[29]In September 2008 Mr Webb was made redundant in a restructuring of the Mears Projects senior management team. From September 2008 onwards Mr Macleod attended board meetings held periodically by Mr Hodgson. There is a dispute as to what may have been agreed at such meetings.[30]No bonus was paid to Mr Macleod in 2009.[31]In March 2010 Mr Macleod was paid a bonus of £17,500.[32]In March 2011 Mr Macleod was paid a bonus of £25,000.[33]Mr Macleod first raised his present claim by letter to Mr Miles dated 26 October 2011. He noted that the final account for the St George’s project had been agreed on 2 August 2011 and that “it follows that in accordance with our agreement, confirmed in your email of 16th November 2007, I am entitled to my profit share of 75%.”[34]There then followed a meeting between Mr Macleod and Mr Miles at which the claim was discussed. At that meeting Mr Miles made clear his understanding that any agreement only related to the period up to December 2008.[35]Following the meeting Mr Macleod sent a letter setting out his calculated claim. His claimed entitlement was disputed by Mears, a dispute which has led to these proceedings and the present trial. His quantified claim is for £2,318,723.06. This is largely derived from the profitability of the St George’s Estate project, one of those taken over from Makers.[36]At the trial I heard evidence from Mr Macleod, Mr Miles, Mr Hodgson and Mears’ financial director, Mr Smith.

The Issues

[37]The principal issues may be summarised as follows:(1) Was a contractually binding agreement made?(2) If so: (a) Was the bonus agreed for Mr Webb’s and Mr Macleod’s teams or for them individually? (b) Was the allocation of 75p in the pound only until April 2008? (c) Were the terms only applicable until December 2008? (d) Was there a bonus cap?(3) Was the agreement subsequently varied or superseded and, if so, on what terms?

Was a contractually binding agreement made?

[38]Mears submitted that there was no consideration for such an agreement and that it received no benefit over and above the services it was paying for through the existing remuneration arrangements. However, the remuneration package agreed with Mr Macleod was part of an agreement made whereby he would take on a new role, with new responsibilities as a Project Manager of a team in relation to various projects, including Mears Projects. Applications had been sought for this position and he had been selected for it. It is clear that he was providing specific benefits over and above those required by the general terms of his contract with Makers.[39]Mears further submitted that, if Mr Macleod’s employment contract was varied as alleged, then it would be void under Regulation 4 of TUPE.[40]Regulation 4(1) provides for a statutory novation of the employment contract:
“… any such contract [of employment] shall have effect after the transfer as if originally made between the person so employed and the transferee [here, Mears].”
[41]Regulation 4(4) provides:
“Subject to regulation 9, any purported variation of a contract of employment that is, or will be, transferred by paragraph (1), is void if the sole or principal reason for the variation is the transfer.”
[42]Mears submitted that the operative reason for the alleged variation was the transfer. It pointed out that Mr Macleod’s evidence was that he had a number of job offers in October 2007 and that he was unsettled by the transfer to Mears (and a number of his colleagues went elsewhere). Mr Hodgson was engaged in a complicated exercise to seek to harmonise the terms of those transferring. At this point, an agreement was reached as to Mr Macleod’s pay. If there was such an agreement, it was submitted that it was accordingly void.[43]The transfer of Mr Macleod’s contract occurred in September 2007. The alleged variation was made on 16 November 2007. Further, as already stated, it reflected his new role and responsibilities as Project Manager. The transfer was not the sole or principal reason for the variation. I accordingly reject Mears’ case on Regulation 4.[44]Mears’ arguments relating to whether a binding contractual agreement was made are tied up with its case on team allocation, and will be considered below.

Was the bonus agreed for Mr Webb’s and Mr Macleod’s teams or for them individually?

[45]The incentives agreed to be paid under clause 5 of the T/A were to be “identified separately per team”. Mears submitted that this meant for each of Mr Webb’s and Mr Macleod’s teams. Mr Macleod submitted that it meant for Mr Webb and him personally.[46]In my judgment the T/A is to be construed as relating to incentive payments for the teams, not the individuals for a number of reasons. In particular:(1) The natural and ordinary meaning of the word “team” is that it is referring to a group of individuals rather than to an individual.(2) Where it is wished to refer to Mr Webb and Mr Macleod personally the T/A does so, as in clause 12.(3) The profit share allocated under clause 10 also refers to the “management team” (emphasis added) rather than “management”.(4) The 100k retention allowed under clause 10 is a significant sum for individuals on salaries of £70,000.(5) The accompanying documents clearly identify Team 1 and Team 2 and the individuals comprising those teams. Reading the documents together one would reasonably understand each of these to be the “team” referred to.(6) The documents are to be read together as they formed one spreadsheet attachment for all of which approval was sought and given.(7) The known background was that Mears bonus schemes operate by way of pooled profit for the benefit of each business unit.(8) Mr Miles had explained that this arrangement was proposed in relation to each of the teams.(9) It was against this background and primarily for this purpose that the budgets had been requested and produced.[47]Further, Mr Macleod accepted in evidence that clause 5 was the basis of incentive for each team and that each team gets paid on the basis of the projects it is undertaking. He also accepted that had a bonus pool been identified it was his responsibility to distribute that pool to his team. As he stated in an email of 18 August 2008:
“b/ Bonus has been agreed with the MD and I am not looking to change this. David Miles was very clear that each business unit is responsible for their own success and will be rewarded accordingly. c/ Distribution of the bonus within the business units is at the discretion of the Project Directors as agreed with the MD.”
[48]A similar statement was made by Mr Webb in an email of the same date in which he said:
“Bonus - as JW/DM agreement with D Miles dated 16/11/07, bonus paid to staff at the discretion of the Project Director responsible for that particular team.”
[49]Mr Macleod submitted that the T/A related to personal terms, as reflected in clause 12. I agree that clause 12 relates to personal terms, as did the approval of their proposed salary. However, the terms of clause 12, which refer to Mr Webb and Mr Macleod, are in stark contrast to those of clauses 5 and 10 which refer instead to the “team”. Further, both Mr Macleod and Mr Webb had a strong personal interest in the bonus allocation to the “team”.[50]It was further pointed out that the T/A does not address the question of distribution, as would be expected if it concerned a pool arrangement. However, the T/A was concerned with the calculation of the bonus pool. In any event it was agreed that distribution was to be discretionary, as Mr Macleod confirmed in his August 2008 email.[51]Reliance was also placed on the fact that in the forecasts under the heading “Team” appear the initials of Mr Webb and Mr Macleod. However, this is because they were the leaders of the teams, the members of which were clearly identified in the accompanying contract staff document.[52]For all these reasons, and those given by Mears, I conclude and find that the bonus agreed in the T/A was a pooled bonus for the benefit of Mr Webb and Mr Macleod’s teams, and not an individual bonus.[53]Mears submitted that this shows that T/A was not meant to be contractual. It did not confer a personal entitlement; it simply set out the arrangements for the calculation of pool bonuses. However, in my judgment the approval of the T/A was intended to have and did have contractual effect. That is clearly the case in relation to Mr Webb and Mr Macleod being Grade 8 employees, the benefits conferred thereby and their salary. An entitlement to claim a share of a specified bonus pool is a recognised right, even if distribution is discretionary. Further, Mr Miles accepted in evidence that Mears was bound by the agreement he had made and would keep its promises.[54]Mears further submitted that this is not how the claim has been advanced and that the sole claim made is for a specified sum due personally. There is some force in this but that does not mean that, subject to permission being granted, a claim to a share in a bonus pool could not be made. For the avoidance of doubt, I have not made any final findings as to the basis upon which any discretionary distribution was to be made - this was not a matter in issue.

Was the allocation of 75p in the pound only until April 2008?

[55]The relevant terms are:
“5 Incentive payments based on 50p in the pound on Net Profit and 75p in the pound on Keller Liability projects … 10 Profitability from April 2008, the first £100k profit will be retained by management team, thereafter 50/50 split Mears/ management.”
[56]Mears submitted that the 75p bonus arrangement set out in clause 5 only applied until the end of March 2008. Thereafter the applicable provision was clause 10.[57]Mr Macleod submitted that the 75p bonus arrangement applied throughout the life of the Keller Liability projects.[58]Contractual documents should so far as possible be construed in a consistent rather than a contradictory manner.[59]On Mears’ construction the two provisions work alongside each other. The bonus arrangement based on profitability “from April 2008” is governed by clause 10. Clause 5 applies prior to that time.[60]On Mr Macleod’s construction there is a clear conflict between the provisions. Although clause 10 states that, after the 100k retention, the split will be 50/50 “from April 2008”, on his case the split thereafter remains 75/25 as specified in clause 5. In Opening the suggested answer to this conflict was that the words “save in relation to the Keller Liability projects, for which the 75/25 split shall continue to apply” should be read into clause 10. This is not pleaded and had not previously been suggested. There is no necessity for any such implication, nor is it so obvious as to go without saying. On the contrary it cuts across the clear meaning of clause 10 as it stands.[61]Mears’s construction is also borne out by the background to the inclusion of these provisions. As Mr Miles explained in evidence, which evidence I accept, the 75/25 split and the 100k retention were agreed because it was recognised that the existing Makers’ contracts were onerous and that initially it might be difficult to exceed budget by any material amount. More generous terms were accordingly offered and agreed to for an initial period. Thereafter the normal Mears 50/50 split would apply. The differing regimes before and after April 2008 reflected the fact that that was when the contracts were to be novated to Mears, a distinction borne out by the separate budgets prepared for before and after April 2008.[62]Mr Macleod’s evidence on this issue was confused. In his witness statements he asserted that the 100k retention was to apply from the start and clause 5 thereafter. In cross examination he accepted that the 100k retention only applied from April 2008, as the terms of clause 10 makes clear.[63]Mr Macleod sought to place reliance on the fact that the approved April to December 2008 budget in fact incorporated a profit calculation based on a 75/25 split, but, unlike in the budget to March 2008, this was not expressly stated. In any event, as both parties were agreed, no split was to apply until after the 100k retention.[64]For all these reasons, and those given by Mears, I conclude that the 75p allocation only applied up until April 2008.

Were the terms only applicable until December 2008?

[65]Mears submitted that the T/A had to be read together with the approved budgets, that those budgets only went up to December 2008, and that the bonus arrangements related to those budgets and that period.[66]Mr Macleod submitted that there was no stated end point in the T/A and that the arrangements applied for the life of the projects covered.[67]As already held, it is necessary to consider the spreadsheet documents together. It was the entire suite of documents for which approval was sought and obtained. Indeed, by way of example, it is in the attached documents rather than the T/A that the agreed salary for Mr Webb and Mr Macleod is to be found.[68]It is also necessary to consider the approved documents against the known background. As already found, this included Mr Miles’ explanation of how the Mears bonus scheme worked on the basis of a split on profit achieved over and above an approved budget. Budgets for approval were accordingly prepared and put forward on the basis that had been discussed. These budgets were for the periods November 2007 to March 2008 and April to December 2008. These were the only budgets considered and approved.[69]In my judgment the agreed figures to be included in those budgets, upon the basis of which net profit was to be calculated, only applied to the approved budgets. There was no commitment or agreement to the budget and bonus figures going forward from December 2008, still less, as is Mr Macleod’s case, going forward for an uncertain and indefinite period.[70]This is consistent with the way in which Mr Miles had explained that Mears bonuses were dealt with, namely a year on year basis and in relation to budgets set and approved in advance.[71]It is also inherently unlikely that Mears would agree to an open-ended commitment to contribute to a bonus pool on the basis of (for example) fixed operational overheads and contract insurance charge (clause 6 and 7 of the T/A). Further, this commitment could be for an extended period, as was borne out by the fact that there were a number of extensions to the St George’s Estate project.[72]Equally, it is inherently unlikely that Mr Macleod would agree to an arrangement which meant that neither he nor his team would have any claim to bonus on a particular project until after the Final Account Statement had been agreed, whenever that might be. Further, if that had been contemplated, it is likely that some provision for interim payments would have been made, which it was not.[73]Although Mr Macleod stressed that these were not normal Mears bonus arrangements, I have already held that after the 100k retention they were on the usual 50/50 split basis. Thereafter there was no need or justification for treating the arrangements differently.[74]Mr Macleod further submitted that it made good sense to link the arrangements made to the completion of the projects because it was only then that the net profit would be capable of accurate calculation. Whilst, as Mr Smith explained, this may be so if one wants to be accurate to the nearest penny (and to achieve that one would need to wait until sometime after the final account) the monthly P&L accounts provide a reliable basis for calculating profit on a rolling basis, and are commonly so used both in Mears and in other businesses.[75]Mr Macleod further relied on the fact that the approved budgets indicated that there would be continuing turnover into the following year. However, there were no budgets requested, prepared or approved relating to that later period.[76]For all these reasons, and those given by Mears, I conclude and find that the T/A bonus agreement only applied to the accompanying approved budgets and therefore only up until the end of December 2008.

Was there a bonus cap?

[77]Mears submitted that the “Mears Group Benefits sheet” referred to in clause 12 of the T/A was the “Mears Projects Benefits Sheet” which stated that grade 8 employees’ bonuses were “up to 100%” of salary. Accordingly there was a 100% salary cap on any bonus agreed.[78]Mr Macleod submitted that the document thereby referred to was the “Mears Group Benefits Proposal”. In relation to bonus this stated “Separate document, if applicable”. He submitted that the “separate document” was the T/A, which contained no reference to any cap. Mears submitted (if relevant) that the “separate document” was the Mears Projects Benefits Sheet.[79]The Mears Projects Benefits Sheet was a document which Mr Hodgson formulated for the purpose of harmonising the terms of those who would be part of the Mears Projects division. I accept that it is likely that he showed this document to Mr Webb and Mr Macleod at one of his initial meetings with them. However, he did not provide them with a copy and, since he was not involved in the issue of bonuses, there was no need to discuss nor did they discuss the bonus section of the document.[80]The Mears Group Benefits Proposal was a group document which Mr Miles had. I find that it was a document which he showed to Mr Webb and Mr Macleod in the context of their discussions on 7 November 2007 of grading, car allowance and other benefits, as reflected in clause 12 of the T/A.[81]Against that background I find that it is the Mears Group Benefits Proposal that is being referred to in clause 12. Further, as Mr Miles accepted in cross examination, as a matter of language “Mears Group Benefits sheet” more naturally refers to the Group document than one specifically related to Projects.[82]I find that there was no discussion of what the “separate document, if applicable” referred to, but in the dealings and discussions between Mr Webb, Mr Macleod and Mr Miles the only separate document which addressed the issue of bonuses was the T/A and accompanying documents. It is to these documents that the Mears Group Benefits Proposal is reasonably to be understood as referring.[83]Neither the T/A nor the accompanying documents say anything about bonus caps. This is not surprising if, as I have held, the T/A is concerned with the calculation of the team bonus pool rather than personal bonus entitlement or distribution. On Mears’ own case there was no need to address bonus caps.[84]I accept and find that, in his earlier discussions with Mr Webb and Mr Macleod, Mr Miles had said that Mears provided bonuses of up to 100% of salary, but this was never set out or specified as part of the agreement reached by the T/A and accompanying documents.[85]The fact that Mr Webb and Mr Macleod did not understand there to have been an agreed salary cap is borne out by an email from Mr Hodgson to Mr Miles reflecting discussions he had had with them in March 2008 in which he stated that “they were not happy that I indicated their bonus is capped at 100% of salary as this was contrary to their understanding of the deal they did with you”.[86]It is further borne out by the fact that it was not a matter raised by Mears at the time that of the claim, or of discussion and rejection of the claim, or indeed at any time until amendments were made to the Defence shortly before trial.[87]I accordingly conclude and find that the agreement did not address or include a bonus cap. That is not to say, however, that Mears bonus caps may not be relevant for the purposes of any discretionary distribution.

Was the agreement varied or superseded?

[88]Mears submitted that it was subsequently agreed that the bonus pot was to be calculated on a divisional basis (i.e. across projects) rather than on a team basis.[89]There is no doubt that this was canvassed by Mr Hodgson in March 2008 but the contemporaneous documents support Mr Macleod’s evidence that this proposal was rejected, as is borne out by Mr Hodgson’s March 2008 email to Mr Miles referred to above, and subsequent emails referred to below.[90]Thus Mr Webb and Mr Macleod’s position remained the same when the proposal was revived by Mr Hodgson as part of a draft business plan which he put forward in July 2008. Mr Macleod’s response was that he was not looking to change the bonus agreed with Mr Miles, as set out in his 18 August 2008 email referred to at paragraph 47 above.[91]Mr Webb’s response was to similar effect in his email of the same day referred to at paragraph 48 above.[92]Mr Hodgson’s draft business plan was not implemented but there was a subsequent restructuring following Mr Webb being made redundant in September 2008. The restructuring involved Mr Macleod and Mr Cannon becoming Operations Directors and Mr Fitzmaurice a director. It was Mr Hodgson’s evidence that at board meetings thereafter he stressed that the business could not operate with separate bonus pots and that this would be unfair to directors who had taken on less profitable contracts for the good of the division. It was his evidence that Mr Macleod agreed that there would be one bonus pot per division.[93]There was no documentary record produced of these meetings or these discussions. Mears placed reliance on a later email from Mr Macleod dated 29 March 2010 in which he stated that:
“As you are aware the bonus arrangement with David Miles was based on 50 in the pound on all profits achieved, following our discussions within our initial board meetings it was understood that the profits of all contracts would be pooled together to give a level playing field for all Directors. These profits would then be either distributed as bonus payments or put aside for the future.”
[94]Although this provides some support for Mears’ case, it is unclear as to exactly what was agreed, when it was agreed and from when any such agreement was to apply.[95]On my findings the agreement made with Mr Miles only extended up until December 2008. The burden is on Mears to prove an agreed variation of that agreement. There is no evidence of any discussion or agreement with Mr Miles to change what had been agreed. The evidence of the discussions with Mr Hodgson is vague and not set out in any contemporaneous documents. In my judgment it has not been proved that there was any agreed variation to the bonus agreement made with Mr Miles.

Conclusion

[96]I accordingly find that:(1) The T/A and accompanying documents involve a contractually binding bonus agreement.(2) The bonus agreed was for Mr Webb’s and Mr Macleod’s teams rather than for them individually.(3) The allocation of 75p in the pound only applied until April 2008.(4) The agreed terms were only applicable until December 2008.(5) The agreement did not include a bonus cap.(6) The agreement was not subsequently varied or superseded.[97]The parties will need to consider the implications of these findings for the claims made and address the court further.